{"id":1863,"date":"2023-06-15T09:34:25","date_gmt":"2023-06-15T08:34:25","guid":{"rendered":"https:\/\/hcfx.sofyma.com\/?p=1863"},"modified":"2023-10-11T12:42:03","modified_gmt":"2023-10-11T11:42:03","slug":"fed-skip-but-hawkish-dot-plot-sees-markets-upwardly-revise-rate-expectations","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/fed-skip-but-hawkish-dot-plot-sees-markets-upwardly-revise-rate-expectations\/","title":{"rendered":"Fed \u2018Skip\u2019 But Hawkish Dot Plot Sees Markets Upwardly Revise Rate Expectations"},"content":{"rendered":"
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This represented the first time that the FOMC opted to keep rates unchanged in the last
\nten meetings spanning fifteen months, as they signalled a \u2018skip\u2019 to their monetary tightening cycle.<\/p>\n

Rhetoric from policy makers since the FOMC\u2019s meeting in May has focused on the subtle difference between a \u2018pause\u2019 and a \u2018skip\u2019 (where the latter denotes an intentional decision to leave out a hike before continuing to tighten later on). As such, during Powell\u2019s press conference, the Fed\u2019s Governor was keen to reiterate that there may be more rate hikes this year and looked to provide a defence to the \u2018skip\u2019 stating that \u201cit seemed to us to make obvious sense to moderate our rate hikes as we got closer to our destination\u201d. Health Insurance<\/a><\/p>\n

The release of the dot plot also suggested that most policy makers are projecting two more<\/p>\n <\/div>\n

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hikes of this year. This, along with Powell\u2019s hawkish comments, has seen markets upwardly revise their rate hike expectations for the Fed, given that many investors were previously weighing on just one additional 25bps hike this year.<\/p>\n

Powell was also keen to defend the Fed\u2019s actions by arguing that the skip would allow policy makers more time to assess the impact of their tightening cycle. This being particularly important, he argued, given the time lag between hiking rates and seeing the effects on the wider economy. As such, FOMC members\u2019 monetary decisions will continue to be highly contingent on data around inflation, the labour market, growth and banks\u2019 balance sheet\u2019s resilience to the Fed\u2019s tightening.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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All Eyes on Frankfurt Ahead of Rate Decision<\/h2>\n <\/div>\n
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At 12:15 this afternoon, the ECB will make their latest rate decision, where the general market consensus is expecting Frankfurt to raise rates by a further 25bps. This would mark the eighth consecutive rate hike from the central bank and bring borrowing costs to their highest level since 2008 as inflation continues to remain well above their 2% target. While inflation is slowing in all but two of the currency union\u2019s member states, core inflation remains at 5.3% on an annualised basis across the eurozone, while headline (which includes food and energy indexes) is at 6.1%.<\/p>\n

The ECB have already raised rates by 375bps over the last twelve months, and it is expected that policy markers will also opt for a further 25bps hike in July. Nevertheless, the ECB continues to weigh on the implications of overtightening especially given how Germany (the largest economy in the Eurozone) is in a technical recession.<\/p>\n

The ECB are also expected to provide further guidance on their quantitative tightening programme. As of March, the size of the ECB\u2019s balance sheet was some \u20ac1tn down from its peak with the central bank passively and actively reducing their portfolio.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Privileges Committee to Publish Report on Johnson\u2019s Conduct<\/strong><\/p>\n

Today will see the Parliamentary Privileges Committee publish their report on former PM Boris Johnson\u2019s conduct to the House of Commons around party-gate. According to the FT citing sources close to the inquiry, Johnson \u201cwill have been found to have committed ‘multiple’ contempts of parliament\u201d including \u201cbeing found to have misled MPs\u201d. With<\/p>\n <\/div>\n

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Johnson already resigning last Sunday, and tensions high between the former and current PM all eyes are on the findings of the report and subsequent statements from Downing Street\u2019s former and current resident.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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New Zealand Enters Recession<\/h2>\n <\/div>\n
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Data this morning reveals that New Zealand has entered a technical recession as the country sees a slowdown of economic activity with borrowing rates at 14-year highs. Stats NZ reported that the economy contracted 0.1% over Q1 2023 following a 0.7% contraction in Q4 2022. The first three months of the year has seen a sharp slowdown in the business services sector which contracted 3.5%, though household consumption rose 2.4% as residents spent more on travel.<\/p>\n

Economists assessing the data highlighted the impact of cyclones Hale and Gabrielle, which caused major problems to much of the country\u2019s fruit and vegetable growing regions. The RBNZ earlier indicated that they did not project further rate hikes, and while inflation remains above target, today\u2019s data gives greater credence to the view that the central bank will be less inclined to further tighten.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Yesterday evening, the Federal reserve met market expectations by holding their benchmark rate. This represented the first time that the FOMC opted to keep rates unchanged in the last ten meetings spanning fifteen months, as they signalled a \u2018skip\u2019 to their monetary tightening cycle.<\/p>","protected":false},"author":15,"featured_media":1891,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-1863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/1863","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/comments?post=1863"}],"version-history":[{"count":35,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/1863\/revisions"}],"predecessor-version":[{"id":3833,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/1863\/revisions\/3833"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media\/1891"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media?parent=1863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=1863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=1863"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=1863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}